Tuesday, September 2, 2008

Ospraie Fund-More Hedge Fund Closures To Come

Another by product of a crowded space.

The Ospraie Fund a $3.8 billion commodity fund is shutting down. They are down about 38% YTD and LEH owns 20%. Besides Neuberger Berman, does LEH own anything that's not imploding?

Hedge funds are about "absolute returns", not "relative returns". It's not supposed to be about 2 and 20 and then go home, although in many cases that's what happens. A successful fund beats the averages, if the S&P is up 8%, you want better than that for it to have a positive "absolute return." Mutual funds for years have underperformed "absolutely" and simply mirror the market on a relative basis. You know I think mutual funds are a waste of time unless you are in a Vicodin coma and expect to wake up in 30 years.

I don't mean to be harsh but I am looking for many more funds that have been caught leaning on the wrong side to put up red flags in the weeks and months to come, which will only pressure the sector further. More pain to come. Billions if not trillions are in this space.


About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.